Business Loan Calculator
Calculate your monthly business loan payment, total interest, and true cost with origination fees factored into an effective APR.
Fee: $500 · Net proceeds: $49,500
Monthly Payment
$1,025.83
60 payments · $61,549.59 total
How to Use the Business Loan Calculator
1. Enter Your Loan Amount. Use the full amount you're requesting from the lender before any fees are subtracted — not the amount you'll actually receive in your account once an origination fee, if any, is taken out. This is your principal, and it's the number every other calculation is based on.
2. Enter Your Annual Interest Rate. Use the stated rate quoted by the lender. This is the rate applied to your remaining balance each period under the calculator's amortization formula, but it's not the whole cost of the loan by itself — that's what the Effective APR further down accounts for.
3. Choose Your Loan Term. Use the preset buttons — 12, 24, 36, 60, or 84 months — to quickly compare how term length changes your monthly payment and total interest, or enter a custom number of months. A longer term lowers your monthly payment but increases the total interest paid over the life of the loan; a shorter term does the reverse.
4. Enter Your Origination Fee (optional). This is a percentage the lender deducts upfront, common on many business loans. Entering it here shows you your actual net proceeds — what you'll really receive to spend — and lets the calculator compute an Effective APR that reflects this fee, since it makes the loan cost more than the stated rate alone suggests.
5. Read Your Results. The calculator shows your Monthly Payment, the total number of payments and their combined total, and a full breakdown: Loan Amount, Total Interest Paid, Total Payment, Stated Annual Rate, and Effective APR (with fee). The pie chart visualizes principal versus interest at a glance — the bigger the interest slice, the more expensive the loan is relative to what you actually borrowed.
Renee needed $50,000 to buy new equipment for her catering business and had two offers to compare: a bank term loan and a merchant cash advance a broker had been pushing. She ran the bank offer through this calculator — $50,000 at 8.5% over 60 months with a 1% origination fee — and got a clear picture: a $500 fee, $49,500 in net proceeds, a $1,025.83 monthly payment, and an Effective APR of 8.93% once the fee was factored in. The merchant cash advance, by contrast, was quoted as a 1.30 factor rate over an expected 9-month repayment, meaning she'd repay $65,000 total on the same $50,000 advance. What surprised her was realizing she couldn't directly compare an 8.93% APR to a "1.30 factor rate" without doing extra work — factor rates don't account for repayment speed the way APR does, and a quick estimate showed the MCA's annualized cost likely ran into the double or even triple digits once converted to the same basis as the bank loan's APR. She turned down the cash advance and went with the bank loan, despite the MCA's faster approval process.
Key Terms
Loan Amount (Principal)
The full amount borrowed before any fees are deducted — the starting balance your monthly payment and interest are calculated against.
Annual Interest Rate (Stated Rate)
The interest rate quoted by the lender, applied to your remaining loan balance each period under standard amortization.
Origination Fee & Net Proceeds
The origination fee is a percentage the lender deducts upfront; net proceeds is what you actually receive after that fee comes out.
Monthly Payment
The fixed amount due each period under the loan's amortization schedule, covering both interest and a portion of principal.
Total Interest Paid
The sum of every interest payment over the full life of the loan — the true dollar cost of borrowing, separate from principal repayment.
Effective APR
The interest rate that accounts for both the stated rate and any origination fee, reflecting your true annualized cost of borrowing.
Comparing a Factor-Rate Offer Against This Calculator's Effective APR
If you're shopping business financing beyond a standard bank term loan, you'll likely run into an offer quoted very differently from anything this calculator produces: a merchant cash advance (MCA) priced with a "factor rate" instead of an interest rate. Knowing how to translate that into the same terms as this calculator's Effective APR is essential before comparing the two side by side.
A Factor Rate Isn't an Interest Rate, Even Though It Looks Similar
An MCA quote like "1.30 factor rate" means you repay $1.30 for every dollar advanced — a $50,000 advance becomes a $65,000 total repayment, regardless of how quickly you pay it back. That fixed multiplier can make the cost look modest on the surface, especially next to a term loan's single-digit or low-double-digit percentage rate.
Repayment Speed Is What Makes the Comparison Tricky
Unlike this calculator's Effective APR, which already accounts for time by spreading a fixed monthly payment across a set number of months, a factor rate says nothing about the repayment period on its own — that's determined separately by a daily or weekly holdback on sales. The same 1.30 factor rate repaid over 4 months carries a dramatically higher annualized cost than the identical factor rate repaid over 12 months, because the same total cost is being compressed into a shorter or longer window.
Why This Matters Before Signing Anything
Once converted to an annualized basis using the actual expected repayment period, MCA costs commonly land far above what a term loan's Effective APR would show for a comparable amount — frequently in the range of double or triple digits annually. Whenever you're weighing a term loan against a factor-rate product, run the term loan through this calculator first to get a clean Effective APR, then convert the factor-rate offer to the same annualized basis before deciding.